Jonathan Mayo brings you the word on the street

August 2008

There seems to be no end to this story, with things changing all the time. Media all over the country are writing and talking about it. Here’s the latest, as I understand it, both in terms of what’s being reported and what I’ve been able to ascertain.

The Pittsburgh-Post Gazette’s Dejan Kovacevic reported earlier today that, according to his source, “The Pirates’ disputed contract agreement with Pedro Alvarez will be the
primary focus — and not that of any other player — of the Major
League Baseball Players Association’s grievance with commissioner Bud
Selig’s office.” The story goes on to say that the union will contend that the Alvarez agreement is the only one in question and that there are phone records to show a call coming in to Scott Boras’ office at 12:02 a.m.

Here’s my main question with that. If that is indeed the case, how come the Commissioner’s Office has pulled Eric Hosmer off the field until the matter is settled in that Sept. 10 hearing, as reported by MLB.com’s Dick Kaegel? Maybe the Commissioner’s Office is just doing due diligence, but would it really be necessary to keep the kid from playing if the grievance only mentioned Alvarez? In fact, an unnamed source refutes the Post-Gazette story, saying the grievance filed by the Players Association does not center only around Alvarez.

I’ve received a copy of the Notice of Grievance, sent from the Players’ Association to Rob Manfred, the Executive Vice President of Labor Relations and Human Resources for Major League Baseball. The memo, dated August 27, 2008 with a subject titled, “Grievance No. 2008-11 (August 15 deadline)” is signed by Michael S. Weiner, General Counsel for the MLBPA. While this two-page memo doesn’t directly contradict the Post-Gazette report, there is no mention of a specific agreement or club in the document. The second paragraph reads:

The Commissioner’s Office, without notice to the MLBPA, unilaterally determined to permit Clubs to negotiate with drafted players after the August 15, 2008 deadline, and unilaterally determined to accept agreementsby Clubs after the August 15, 2008 deadline.

I’ve added the bold-face to point out that it’s all plurals the grievance refers to. Again, not the be-all, end-all in this, but it didn’t claim there was permission to a Club — it was Clubs. It was more than one agreement, according to the grievance. I think you see what point I’m trying to make. To me, that combined with the fact that Hosmer can’t suit up, means this isn’t just about Pedro Alvarez at this point.

Some other things to chew on:

Kovacevic has a really interesting piece on the bad blood between Scott Boras and Pirates president Frank Coonelly. One of the more intriguing things I took from it is the possibility of Boras still lingering over the fact the Pirates — albeit under other management — dismissed his client Matt Wieters in the previous year’s draft. Don’t know for sure how much of that figures into all of this mess, but you never know.

In terms of the implications that much of this stems over the Boras Corp. being steamed that Buster Posey — and the agency who represents him, CAA — got more money than Alvarez did, here’s some food for thought.

Someone in the industry told me that both Pedro Alvarez and Buster Posey had CAA and Boras Corp as their final two choices for representation. That’s been somewhat refuted in that someone else informed me Posey never met with a representative from Boras Corp in person. Could that add fuel to this fire, that Posey got more money — with Jeff Berry and CAA advising him — than Alvarez and wouldn’t even let Boras in the door to talk pre-draft?

White Sox pitcher John Danks and his younger brother Jordan, fired Boras Corp after the first day of the draft this June, as reported by Scott Merkin on MLB.com (and other places). The younger Danks was drafted in the seventh round (day 2) of the draft and the University of Texas outfielder ended up signing for an above-slot deal, while being represented by… you guessed it, Jeff Berry and CAA. No reasons were given for the Danks-Boras split at the time, but I’ve learned that it stems from the Dankses learning Boras turned down money — that would have seen Jordan get selected in the first day of the draft — without checking in with his advisee.

This thing is far from done, folks. Hang tight, I’m sure there’ll be a lot more to come

We recently posted a story written by myself and Pirates.com writer Jen Langosch with more details about the Alvarez-Boras-Pirates saga. Rather than sum it up here, I suggest you go and read it. It breaks down what both sides say happened up to and immediately following the signing deadline. I think there’s going to be a lot more coming out about this as the Sept. 10 date for the hearing approaches.

I’ve been trying to wait to post something on this until I could better understand what exactly was going on. Right now, it seems to be a situation of the more you find out, the less you know or the more confusing it gets. But here’s the deal as I understand it as of right now:

You can read the story about what’s going on officially at this point here. It’s also worth reading Pirates president Frank Coonelly’s full statement on the matter. For those of you who don’t know what I’m talking about, No. 2 pick Pedro Alvarez has been put on the restricted list at the request of the Pirates. Coonelly’s statement says, “The Pirates were forced to request that Pedro be placed on the
Restricted List because we were informed by his agent, Scott Boras,
that Pedro will not sign the contract to which he agreed on August 15.
Boras further informed us that Pedro will not report to the Club unless
we renegotiate his contract and agree to pay him more than the $6
million signing bonus to which he agreed.”

Scott Boras, for his part, has referred us to the Players’ Association, saying it is their grievance and not his. The contention is that the agreement was made after the midnight deadline, something Mr. Coonelly flatly denied. It seems fairly clear, both in the statement and in other information I have gathered that the original deal (whether it was pre- or post-deadline) was actually hammered out between the Pirates and Pedro Alvarez (and his family) directly, without the benefit of Mr. Boras’ counsel. There has been a parallel made to the drafting of Alex Rodriguez in 1993. According to Baseball America, “Rodriguez signed with the Mariners shortly before
going to class at the University of Miami in late August, and on Oct.
14, Boras submitted a grievance, backed by the union, that the Mariners
didn’t make clear the terms of the contract he signed. The grievance
asked that Rodriguez should be allowed to renegotiate his contract or
void it and become a free agent.”

There have been some rumors and reports of deals being consummated after the deadline, most notably the one between the No. 3 pick Eric Hosmer (also a Boras client) and the Kansas City Royals. The biggest difference, of course, is that Hosmer signed his contract and has already begun his pro career, while Alvarez has yet to sign on the dotted line.

Here’s how the process seems to work in these down-to-the-wire cases. The two sides come to a verbal agreement on a net value for the deal. Using the Alvarez case as the example, that value was $6 million. By 11:59 p.m., both sides notify the Commissioner’s Office a deal has been struck for that amount. After midnight, it’s fairly common for some of the smaller details to be ironed out — things like when/where the physical will take place, smaller benefits like college tuition (if it’s applicable), etc.

It’s become apparent that there have been instances when negotiations have indeed extended past midnight. The Rangers evidently negotiated with outfielder Julio Borbon, also a Boras client, past midnight at last year’s deadline. That wasn’t brought to light, it seems, because Mr. Boras liked the terms of that agreement, which included a big-league contract. With this situation (see below), it appears he is not pleased with the outcome.

There are a few big questions that still need to be answered:

1. Is that pre-deadline verbal agreement legally binding? The Collective Bargaining Agreement did not expressly state that a
written agreement was needed when it was ratified in 2006. Since that
time, the Commissioner’s Office released a bulletin that said an email
or fax had to be sent to the Commissioner’s Office by the deadline.
This correspondence would come only from the club after the club had
reached a verbal agreement with the player and/or his agent. If Alvarez claimed he never agreed to a deal, then this case could head straight to court. But he’s not arguing that, but rather that the negotations extended past the deadline. It’s possible it could be argued that the verbal agreement, since it’s the usual course of conduct and has always served as binding in past practice, is then legal. But you have to wonder that if a written contract is not signed by a certain time — even if it’s because the player has stalled the process — then maybe all bets are off.

2. Can such a deal actually be re-negotiated? There seems to be a paradox within all of this. If the contention is that the deal was agreed to after the deadline, that would make it void, right? If it’s void, what is there to be re-negotiated? My guess is that even though Mr. Boras has removed himself from the proceedings currently by pointing all inquiries to the Players’ Association, a certain search for new loopholes is taking place. If this grievance ends up carrying weight, a new avenue for re-negotiating contracts would now exist.

3. Why has Pedro Alvarez decided to go this route? According to the statement from Mr. Coonelly, “Mr. Boras refused to engage in any negotiations at all until shortly
before the August 15 deadline and even then an agreement was reached
only after Pedro took control of the negotiations.” If Pedro stepped in and got this done, seemingly showing that he’s his own man and wanted to get going on his pro career, what has caused this seeming change of direction? The source cited in the story says that it might be over $200,000, an amount that would put Alvarez on par with Buster Posey and his deal — the biggest in the draft — with the Giants at No. 5. I’ve had several people — and none directly involved in this situation — strongly imply that this sounds a lot like the Boras Corp. being ticked off about being bested by Posey’s agency, CAA. If that’s the case, how did Alvarez, after making a strong stand by taking over negotiations, allow himself to get caught up in such pettiness?

4. What happens now? The Players’ Association has filed a grievance, which starts out by saying, “The Major League Baseball Players Association
today filed a Grievance challenging the unilateral decision of the
Commissioner’s Office to extend the August 15, 2008 signing deadline for drafted
players. The Association and the Commissioner’s Office have agreed to expedited
processing of this Grievance, with the intention of bringing the matter to
hearing as early as September 10, 2008.” The main bone of contention is not so much that an extension was given — and I’ve received no confirmation that it was — but rather that the Players Association wasn’t informed of an extension as required by the CBA.

6:30 p.m. ET Here’s an official statement from Major League Baseball, courtesy of Pat Courney, VP of Communications. The statement comes from Rob Manfred, Executive Vice President, Labor Relations and Human Resources:

“We believe the grievance is entirely without merit. The deadline was extended to accept minor league contracts voluntarily entered into by the clubs and the players with the help of their agents. It is settled law that the arbitration panel has no authority to disturb such minor league contracts.”

Whether this could lead to a re-negotiation, Alvarez becoming a free agent or going back into the draft class a la Aaron Crow, remains to be seen. I think we’re just getting started here and I’ll be sure to be back with any information as I get it.

This doesn’t take into account tie-breakers, future free agent signings or the fact the Mariners could get an extra pick (20a) if they don’t sign Josh Fields, but they have until next year right before the draft to get that one done. I’ll try to update this one from time to time…

Well, that’s about all she wrote, folks. In the end, three first-rounders not signed (Josh Fields still can get done, though). To me, what has struck me the most is that most teams appeared to hold their ground. Yes, players got well above-slot in many instances, but considering what some of the demands were at one point in time (Aaron Crow being the exception — and don’t necessarily believe those reports that they were THAT close), I think this was a success for the organizations. First off, teams took who they wanted, when they wanted (Pittsburgh with Alvarez, KC with Hosmer, San Francisco with Posey and on down), regardless of those demands. And then, they really didn’t blink.

The biggest case of that is the big-league contract. Or the lack thereof. In the top 10, only LHP Brian Matusz and 1B Yonder Alonso got Major League deals. Alvarez and Posey, in particular, are the ones that jumped out at me as surprises. Yes, I know, they got $6 million or more — how will they ever survive — but to not have to put these guys on 40-man rosters right from the get-go gives these organizations much great flexibility in terms of how long they’ll have these players under control. And while $6 million and the other bonuses are nothing to sneeze at, considering we were talking “Mark Teixeira money” for some (Alvarez), $7 million and big-league deal for others (Alonso), even $10 million for Posey early on, I think those teams did well to get their deals done. But that’s just my two cents worth and I’m sure agents can claim victory based on the large bonuses they delivered. Hey, maybe it’s a win-win?

I’ve got some catching up to do here, with 2009 reports on the Area Code Games, AFLAC and the Baseball Factory (UnderArmour All-American) game at Wrigley Field, not to mention Cape League updates, etc. So check back here in about a week for a head start on next year’s draft…

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